Trump Looks to Suspend Fed Gasoline Tax05/12 06:27

   

   WASHINGTON (AP) -- President Donald Trump said Monday he will move to 
suspend the federal tax on gasoline to help Americans shoulder surging fuel 
prices caused by the Iran war.

   The president cannot suspend the federal tax on his own. Congress would have 
to approve the move.

   Lawmakers from both parties have pushed for a gas-tax suspension, saying it 
would provide much-needed relief for families and businesses that rely on their 
cars and trucks to get to work and school and run everyday errands.

   As of Monday, the average national gas price was $4.52 a gallon, according 
to the AAA motor club, 50% higher than the average price of just under $3 a 
gallon before Trump began the war against Iran.

   What the gas tax supports

   The federal tax is currently set at 18.4 cents per gallon on gasoline and 
24.4 cents per gallon on diesel fuel, an amount that does not include state 
taxes, which often are higher. The tax provides more than $23 billion per year 
in revenue for federal highway and public transit programs.

   Asked by reporters at the White House how long the tax should be suspended, 
Trump said, "Until it's appropriate." While the tax is only a small percentage 
of the price of gas, "it's still money," Trump said.

   As gas prices have spiked, the Trump administration has released millions of 
barrels of oil from the U.S. Strategic Petroleum Reserve and temporarily lifted 
sanctions on some Russian and Iranian oil shipments already at sea. The U.S. is 
negotiating with countries reliant on Middle East crude to join a coalition to 
police the Strait of Hormuz, where about one-fifth of the world's traded oil 
normally flows.

   Trump needs Congress -- and they're beginning to react

   Republican Sen. Josh Hawley of Missouri said on social media Monday that he 
will introduce legislation to suspend the gas tax. Democrats have previously 
sponsored similar legislation. Rep. Anna Paulina Luna, R-Fla., also said in a 
post on X that she will introduce a bill "to suspend the federal gas tax in 
light of Trump's recent remarks."

   Senate Majority Leader John Thune said Monday he has not "been a fan" of a 
gas tax suspension, but added: "You know, I've got some colleagues out there 
who think it's a good idea. So, we'll hear them out.''

   Thune, a Republican from South Dakota, said he'd prefer to reopen the Strait 
of Hormuz to "normalize gas prices" without legislation. "Obviously, any time 
you suspend the gas tax, that leaves a big hole in the highway trust fund, 
which also has implications down the road," he said.

   Sen. Rand Paul, R-Ky., said that "instead of suspending the tax, we should 
suspend the war."

   The ongoing spike in gas prices has set off alarms among some Republicans 
that it could hurt the party's chances in the midterm elections.

   Sen. John Cornyn, who is in a tough runoff race later this month to keep his 
seat, said he wants to know how roads and bridges would be paid for if the tax 
is lifted. But he said there's a "difference between a temporary suspension and 
a permanent suspension."

   "A temporary suspension to get through this sort of bumpy time because of 
the uncertainty about energy prices, I could live with that," he said.

   Trump has previously said higher fuel prices are worth paying to prevent 
Iran from getting a nuclear weapon. That hardline message appeared to soften 
Sunday as Energy Secretary Chris Wright said the Trump administration was "open 
to all ideas," including a suspension of the gas tax, during an interview on 
NBC's "Meet the Press."

   A bill sponsored by Democratic Sens. Richard Blumenthal of Connecticut and 
Mark Kelly of Arizona would suspend the federal tax through Oct. 1. A similar 
measure was sponsored in the House by Democratic Rep. Chris Pappas of New 
Hampshire.

   "Trump's war of choice with Iran is driving up gas prices across the country 
-- and Americans shouldn't have to bear the additional economic burden of 
Trump's reckless decision making," Blumenthal said in introducing the bill.

   Kelly told reporters Monday he still prefers his legislation but would take 
"whatever we can get at this point."

   "People need relief," he said.

   Several states, including Indiana and Georgia, have recently suspended their 
taxes to alleviate high prices amid the war. Kentucky and Utah have reduced 
their state tax. Other states are weighing similar suspensions or tax 
reductions.

   There are drawbacks, industry group says

   The gasoline tax is the single largest source of revenue for federal highway 
and public transit programs.

   While proposed bills would offset any lost Highway Trust Fund revenue with 
general funds, the tax suspension could raise the federal deficit and 
jeopardize the long-term sustainability of investments for highway and public 
transit programs, according to the American Road & Transportation Builders 
Association, which represents the transportation construction industry.

   The group cites studies showing that many retailers do not pass on the full 
amount of the gas tax reduction to consumers. Research also suggests that state 
and federal gas taxes are just one component of a complex pricing scheme that 
includes the global price of oil and other factors.